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Pastimes : Let's Talk About Our Feelings!!! -- Ignore unavailable to you. Want to Upgrade?

To: Ish who wrote (68722)	12/26/1999 1:47:00 PM
From: greenspirit	Read Replies (1) \| Respond to of 108807

Ish, here's some interesting stats on social security. How anyone can defend this pathetically broken system, like the two Democrats running for President, is ridiculous to me. The only ones who love it are the elderly (over age 75) who barely put anything into the system and will get returns on the backs of the young, the poor and minorities. Take a look at these comparisons. Look at the differences when comparing the rate of return to only 3% and 5% investments. heritage.org Average families face low and declining returns for Social Security. Average-income families fare badly under Social Security relative to the return they could receive from a conservative private investment portfolio. For example: A married couple with two children and a single earner fare best, receiving 4.74 percent if the earner was born in 1932. This expected rate of return falls gradually to less than 2.6 percent for those born in 1976. Single males fare especially badly. An average-earning single male born after 1966 can expect to receive an annualized real rate of return of less than 0.5 percent (less than one-half of 1.0 percent) on lifetime payroll taxes. Social Security's inflation-adjusted rate of return is only 1.23 percent for an average household of two 30-year-old earners with children in which each parent made just under $26,000 in 1996. Such couples will pay a total of about $320,000 in Social Security taxes over their lifetime (including employer contributions) and can expect to receive benefits of about $450,000 (in 1997 dollars before applicable taxes) after retiring at age 67--the retirement age when they would be eligible for full Social Security Old-Age benefits. Had this average household placed that same amount of lifetime employee and employer tax contributions into conservative tax-deferred IRA-type investments--such as a mutual fund composed of 50 percent U.S. Treasury bonds and 50 percent equities--they could expect a real rate of return of over 5 percent per year prior to the payment of taxes after retirement. In this latter case, the total amount of income accumulated by retirement would equal approximately $975,000 (in 1997 dollars before applicable taxes). A single male earning what the Social Security Trustees call an average income ($25,723 in 1996) is particularly hard-hit by Social Security's low returns. A 21-year-old single male making an average income throughout his lifetime can expect to lose $309,400 in potential retirement income by staying in Social Security when compared with what he would earn if he invested his payroll taxes in a safe, conservative private retirement fund made up of 50 percent equities and 50 percent government bonds. A 31-year-old single male earning what the Social Security Trustees call an average income will lose $311,000 over the income a conservative private portfolio would likely yield, while a similar 41-year-old will forego $296,000 (in 1997 dollars). The rate of return for African-Americans is particularly low, and in many cases negative. Despite efforts to transfer resources to low-income individuals through Social Security, low-income African-American males realize particularly dismal rates of return from Social Security, even under the most favorable assumptions. For example: Low-income, single African-American males born after 1959 face a negative real rate of return from Social Security. For every dollar he has paid into Social Security, a low-income, single African-American male in his mid-20s who earned about 50 percent of the average wage in 1996, or $12,862, can expect to get back less than 88 cents. This negative rate of return translates into lifetime cash losses of $13,377 (in 1997 dollars) on the taxes paid by the employer and employee. Under conservative assumptions, a 100 percent T-bond portfolio will result in an increase in a lifetime income for the 25-year-old African-American male, net of taxes, of $79,846, while a 50 percent bond/50 percent equity portfolio will likely result in a net increase in post-tax lifetime income of $145,764. A 21-year-old African-American single mother who, in 1996, made just under $19,000 (the average income for African-American females) can look forward to a real rate of return on her Social Security taxes of only 1.2 percent. Under conservative assumptions, if she had saved her tax dollars in a private investment account composed of government bonds, she would have received a real return of around 3 percent per year. With a mixed portfolio of bonds and equities, she could expect a return on her investments of at least 4.35 percent. This means that even with a low-risk/low-yield portfolio composed entirely of Treasury bonds, this single mother could have generated at least $93,000 more in retirement income (in after-tax 1997 dollars) than she would enjoy under Social Security. 2 The gains from a prudently mixed portfolio of bonds and equities are even greater. Had the 21-year-old single African-American mother invested her taxes in a mixed portfolio of 50 percent bonds and 50 percent equities, she could expect to receive $382,840 (in 1997 dollars) in retirement. This represents $192,073 more than she could expect to receive from Social Security. More interesting links... heritage.org The damage social security does to the poor and minorities is astounding. heritage.org heritage.org Why government controlled investment undermines social security.. heritage.org Lessons from Australia... heritage.org